Crypto Fear Index Hits Near-Record Level of 'Extreme Fear' for Investors
KEY POINTS
- The Crypto Fear and Greed Index (FGI) is a daily snapshot of the general market sentiment across the cryptocurrency sector.
- The FGI barometer updates daily based on various data feeds including crypto asset dominance, social media chatter, trading volume, volatility, and more.
- While the FGI has been in the "Extreme Fear" range for weeks, today's number of 7 out of 100 is the second-worst rating since the gauge was created. The worst rating was 5 out of 100 set in August 2019.
The Crypto Fear and Greed Index logs its second-worst measure since the index was created in Feb. 2018.
So far in 2022, more than $600 billion worth of value has evaporated from digital wallets and cryptocurrency exchanges across the crypto sector. The primary drivers of virtually every investable asset are the technical charts tracking trading activity and volume, the macroeconomic fundamentals, as well as the overall sentiment within the marketplace.
Market sentiment toward crypto is near all-time low
One of the ways to gauge market sentiment within the cryptocurrency space is using the Crypto Fear and Greed Index (FGI). The FGI is a daily snapshot of the emotional tone of buyers and sellers within the crypto space. Using FGI as a gauge over time, market watchers get a solid sense of the trending investor sentiment derived from various data feeds including asset dominance, social media, trading volume, and volatility.
The developers behind the FGI website intended to enable crypto investors to make more rational decisions within an asset class that tends to be more volatile and irrational than other sectors. Once the FGI score is calculated every 24 hours, it's graphed on a 0-100 scale with ratings in the range of 0-50 representing different levels of "fear" while the 50-100 rating range represents levels of "greed."
The FGI for June 15, 2022 has fallen to a rating of 7, which is not only a sign of "Extreme Fear" among crypto investors, but it also is the second-worst rating since the sentiment-rating software was developed in Feb. 2018. The worst fear rating recorded was 5, which was logged back in August 2019.
It will be interesting to see what tomorrow's FGI registers, as well as the price action for the most valuable cryptocurrency, Bitcoin, following the expected interest rate hike from the Federal Reserve, which will be announced at 2:00 p.m. EST today as the central bank leaders wrap up the two-day Federal Open Market Committee meeting.
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Our Research Expert
Tor Constantino is a corporate communications executive and business writer with an MBA. Since 2017, he has written about cryptocurrencies, blockchain, and crypto's potential to revolutionize finance. His writing has appeared in outlets including Entrepreneur, Forbes, Fortune, CEOWorld, and Yahoo!.
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